Home Sales in U.S. Likely Rose in June

Sales of previously owned U.S. homes
probably rose in June from a six-month low as the industry
struggled to overcome rising unemployment and foreclosures,
economists said before a report today.

Purchases climbed 1.9 percent to a 4.9 million annual rate,
according to the median forecast of 71 economists surveyed by
Bloomberg News. The pace matches the total sold in 2010 that was
the fewest in 13 years.

Stricter lending rules, unemployment above 9 percent and
delays in processing foreclosures mean it may take years to
reduce the number of distressed properties on the market even as
all-cash purchases have recently helped buoy demand. Federal
Reserve Chairman Ben S. Bernanke last week said the decline in
confidence and lack of job growth that are impeding consumer
spending are also keeping real estate “depressed.”

“Housing continues to bounce around the bottom,” said
Peter Muoio, principal and chief economist at Maximus Advisors
in New York. “We’re not expecting any kind of true upward
momentum any time soon. The high inventory of existing homes is
going to keep prices suppressed for an extended time.”

The National Association of Realtors will release the
figures at 10 a.m. in Washington. Estimates in the Bloomberg
survey ranged from 4.75 million to 5.2 million.

Existing-home sales have fallen since reaching an annual
peak of 7.08 million in 2005, before the housing boom turned
into a subprime-mortgage bust that helped dragged the U.S. into
an 18-month recession.

Cash Purchases

Purchases of previously owned homes have been driven by
investor cash transactions. In May, cash deals accounted for 30
percent of sales. The Realtors group started tracking the
monthly figure in August 2008, and the share on a yearly basis
before that was around 10 percent.

Job growth that sputtered in May and June, along with
tighter bank credit, is also making it difficult for most
Americans to take advantage of mortgage rates that are close to
a record low.

Lender delays in processing home-loan defaults will push as
many as 1 million U.S. foreclosure filings from this year into
2012 or beyond, casting an “ominous shadow” on the housing
market, RealtyTrac Inc., a housing data provider, said last
week. A clogged foreclosure pipeline may prevent real estate
prices from finding a bottom.

Home construction surged last month as better weather
helped builders begin work on projects delayed by storms and
tornadoes earlier this year.

Better Weather

Housing starts last month unexpectedly climbed 15 percent
to a 629,000 rate, the highest in five months, the Commerce
Department reported yesterday. Work on multifamily homes rose 30
percent in June from a month earlier, and it was up 100 percent
from a year ago as foreclosures turned more Americans into
renters.

Competition from existing homes selling at discounted
prices is hurting sales of new dwellings. Purchases of new
properties were little changed at a 320,000 annual pace in June,
economists forecast before a July 26 report from the Commerce
Department. A record-low 323,000 new homes were sold in 2010.

“The high proportion of distressed sales are keeping
downward pressure on house prices,” Bernanke said July 13 in
testimony to the House Financial Services Committee. “The
demand for homes has been depressed by many of the same factors
that have held down consumer spending more generally, including
the slowness of the recovery in jobs and income as well as poor
consumer sentiment.”

Builders remain cautious about the outlook, prompting them
to look for other income sources. Miami-based Lennar Corp. (LEN), the
third-largest U.S. homebuilder by revenue, last month reported
second-quarter profits that beat analysts’ estimates on rising
earnings at its distressed-investing unit.

“The long-awaited selling season of 2011 has not yet
defined itself as the beginning of a recovery cycle,” Stuart
Miller, chief executive officer of Lennar, said on a June 23
teleconference. “The housing recovery will take time and
patience and will be inconsistent and uneven.”